Friday, February 02, 2007

Countdown to Kickoff – Super Bowl XLI tickets are dropping in price


Super Bowl XLI was the perfect ticket storm. The Chicago Bears, who haven’t appeared in a Super Bowl in 21 years and a team from the second biggest American market with a rabid fan following, are set to meet the Indianapolis Colts in their first Super Bowl. Face value for Super Bowl tickets are $600 and $700. The good news if you’re looking for tickets to the game in the remaining two days before Sunday night’s kickoff, the free market system is working to the advantage of the consumer. Thursday evening prices which days ago stood at $4,100 for end zone seats at Dolphins Stadium have dropped to $1,800 per ticket. The bad news, if you purchased tickets earlier this week you’ve learnt a very expensive lesson in why it pays to be patient.

Dolphins Stadium holds about 75,000. The Bears and Colts each received 17.5 percent of the available tickets. After each team dealt with their own needs (key sponsors, owners and others) they each held ticket lotteries to distribute the remaining tickets to their season ticket holders. Usually Super Bowl teams weight the lottery based on the number of years someone has been a season ticket holder. The Dolphins received five percent for hosting the game. The other 29 NFL teams split 34.8 percent of the tickets. Most tickets allotted to individual teams are shared with corporate sponsors and season-ticket holders. The NFL offices retained 25.2 percent of the seats, most of which end up with sponsors and league officials. The 1,000 tickets made available to the public come out of the league's share.

Over the last few years the Internet has afforded many “entrepreneurs” to use the power of the Internet to drive and create businesses. The secondary ticket market has exploded and the Super Bowl presented the perfect storm for the likes of Stubhub.com, Razorgator.com and Tickets.com.

The National Association of Ticket Brokers reports that there are more than 650 ticket brokers nationwide, virtually 100 percent doing most of their business online. The days of buying two tickets from street scalpers outside an arena or a stadium have long since passed. You can be very sure of one thing Sunday, football fans won’t be walking around Dolphins Stadium with thousands of dollars burning a hole in their pockets ready to hand that money over to a complete stranger hoping they’re buying legitimate (non-counterfeit) Super Bowl tickets.

Indianapolis Colts fans are notorious for selling their tickets to key games at the RCA Dome.

"Colts fans are known for selling their tickets and taking the money," Jeff McDonald of Riverfront Choice Tickets in Cincinnati, who has almost 25 years in the ticket broker business told The Indianapolis Star days before the Colts met the New England Patriots days before the January 21 AFC title game at the RCA Dome. "It's pretty common knowledge."

For years, Colts fans have lamented packs of "enemy" fans invading the RCA Dome, particularly for big games, diluting the home field advantage with their colors and vocal cords. At the 2006 AFC title game there were more Pittsburgh Steelers fans in the RCA Dome than Colts fans.

"It seems that for every big game there's a disproportionate number of fans for the other team," said Tom Salentine Jr., a Colts suite holder. "Contrast that with Baltimore (where the Colts played their second round AFC playoff game). Did you see any pockets of Colts fans in Baltimore's stadium?"

That may have been true for other Colts games, but the Super Bowl is regarded as a once in lifetime opportunity for fans to attend. The Colts and the Bears each received 13,000 tickets to Sunday’s game and with each teams lottery based on longevity statistically more than 90 percent of those fans who are lucky enough to win their teams’ lottery attend the game. And here’s the real impact the Super Bowl has on the secondary ticket market. Ticket brokers have to buy tickets from ticket holders, ticket holders who paid a face value of between $600 and $700 for the right to buy the ticket. Anyone interested in selling their tickets is well aware of the market place. A fortunate ticket broker might be fortunate enough to buy a ticket for $1,500, more likely at least $2,000 per ticket. The scarcity of available tickets, the face value of the tickets and the demand for tickets all push Super Bowl secondary ticket market price forward.

"The street business has really died," said Don Vaccaro, who has been selling tickets since 1979 and is the founder and chief executive of Vernon, Conn.-based TicketLiquidator.com in an Associated Press report. "The old-time brokers are saying, 'Look, you got a bunch of geeks selling tickets now.' It's really a lot more brains going in now."

"It used to be, buy a ticket, triple your profit," Vaccaro said. "Now it's buy a ticket and you're lucky if you get 20 percent."

One “ingenious” method online brokers have developed to increase their profit margins adding a 10 t0 15 percent processing fee to the cost of tickets. Given that anyone interested in tickets to Super Bowl XLI is likely in Miami an additional $640 processing fee is nothing more than creative scalping.

StubHub which was purchased last month by eBay reportedly sold eight tickets for more than $10,000 apiece, with an average price of about $4,500, and the cheapest seat going for $2,424. Similarly, RazorGator is reporting an $8,000 price tag for some of the tickets it has sold and an average price of $4,400.

Mike Janes, senior vice president of StubHub, told CNNmoney.com its so-called studies of ticket prices in other states such as Illinois show ticket prices dropping after price caps and restrictions are removed.

SeatSmart.com CEO Larry Kokoszka consistent with Economics 101, more supply means lower prices," said Janes. "The demand doesn't change based on the law, it changes based on how popular the team is."

David Lord, president of RazorGator Experiences, the unit of the company that handles not only ticket sales but travel packages to big events, told CNNmoney.com that the market is far more transparent than it was in the past.

"The common consumer is the dominant provider of this market. It's no longer a broker-led marketplace. There's no back-alley acquisition of tickets the way there was 10-20 years ago. Those days are gone."

The explosive growth of online ticket sales, up to an estimated $3 billion annually according to Forrester Research, has led to 250 percent annual revenue growth at StubHub since it started in 2000. That meant eBay had to bid $310 million for the service.
"I've seen it reported as anywhere from a six to $10-billion industry," said Jennifer Swanson, spokeswoman for TicketsNow.com which, along with StubHub.com, was named to Inc. Magazine's list of the 500 fastest growing companies in a Los Angeles Times report. "People aren't waiting in line for tickets anymore, they are waiting online. This is just another resource to get the seats that were once unavailable to average buyers into their hands."

SeatSmart.com CEO Larry Kokoszka told The Los Angeles Times the price for Super Bowl XLI tickets peaked on January 21, the day after the AFC and NFC Championship games. Most of the winners of each teams’ lottery knew either before their teams qualified for the Super Bowl if they had tickets to the game, and those wanting to go to Miami needed as much time to arrange all of the additional aspects of their Super Bowl travel plans.

"The changes we're seeing in the numbers today mean ticket holders are beginning to unload their tickets so they can be sure to have a buyer come Sunday," Kokoszka said. "It's not consistent with the principles of supply and demand, but it's great news for fans who waited until the last minute to purchase tickets."Many of the hundreds of online ticket sites are selling more than Super Bowl tickets. The parties that surround the big game also have been drawing interest, with tickets available for everything from the annual Playboy Party (selling for up to $2,915) to Tony Siragusa's Cheerleader Party ($285 or less if you use the $100 coupon). Razorgator.com is offering parties Sunday priced from $341 per ticket at the Seminole Hard Rock Paradise in Hollywood (Florida). 80’s rock group Kansas will appear.

You can also buy parking at Dolphins Stadium for $90. If you have a limo and you want to have it at Dolphins Stadium you can buy parking for your limonene for $670 if you visit the good folks at gotickets.com. At totaltickets.com you could purchase everything from hotel rooms to tickets for last night’s EA Sports Madden Bowl Party. The same online broker which claims to be able to secure tickets to everything from Friday night’s Commissioner’s Party to Leigh Steinberg’s Super Bowl party (although the event is listed but totaltickets.com doesn’t show any available inventory for these and most of the events they have listed, are selling Super Bowl NFL Tailgate Party tickets for $975 each). Whatever that event is, according to totaltickets.com is scheduled for Dolphins Stadium Sunday.

VIPsuperbowltickets.com seem to have a business plan similar to gotickets.com They list every possible Super Bowl event, do not appear to have an inventory for many of those events, but claim their ‘army’ of employees will find the events tickets you need for Super Bowl XLI events.

If totaltickets.com is listing events they don’t appear to have any tickets for, that pales in comparison to the Super Bowl page for onlineseats.com. That home page features images and information from Super Bowl XXXIX, the game that was held two years ago in Jacksonville. However if you click onto the sites buy Super Bowl tickets you find tickets for Super Bowl XLI. How much consumer confidence would anyone have in a website that featured content that was two years old? Not exactly a recipe for success.

Forbes Magazine issued a report Wednesday that listed the Super Bowl as the “world’s’ most valuable sports brand”. Forbes subjective list suggests the Super Bowl has a value of $379 million. Forbes based their list on how they saw the value for each day of an event. The two week Olympics, Forbes believes generates revenues of $176 million per day. Over the 17 days of an Olympic Games that’s $2.9 billion.

The Super Bowl is no longer an event for sports fans; it’s an event that sports fans long ago haven’t been a part of. At a face value of $600 and $700 per ticket, adding in airfare, hotel and spending money a no frills trip to Super Bowl XLI will easily cost the average sports fans more than $3,500 for a weekend. When was the last time the average sports fan spent $3,500 on any experience, let alone what is billed as an once-in-a-lifetime experience? That isn’t the world football fans have been a part of for a very long time.

The Super Bowl is also a perfect opportunity for online abuse. Congressional leaders and the Justice Department have done their best to eliminate the online gambling industry. Gambling may be a victimless crime to some, but one of the biggest concerns lawmakers have had regarding online gambling with all of the online gambling sites located ‘off-shore’ consumers weren’t offered any protection. If that rationale was in least partially used to create the online gambling ban why haven’t the same lawmakers attempted to enforce consumer safeguards for online ticketing?

The Bears and the Colts are two of eight NFL franchises who have a partnership agreement with StubHub. The other six teams: Atlanta Falcons, Cincinnati Bengals, Detroit Lions, Houston Texans, Indianapolis Colts, San Diego Chargers, and Washington Redskins. While there is no accounting for how StubHub secured their Super Bowl XLI ticket inventory, given that both the Bears and the Colts each received 13,000 tickets and a fair percentage of each teams’ tickets went to their corporate partners, and StubHub is a corporate partner with each team, its reasonable to assume a percentage of StubHub’s Super Bowl ticket supply was delivered directly from the two competing teams. “Joe Sports Fan” can’t compete with the power of a seven figure sports sponsorship.

The Washington Post reported that StubHub pays the Redskins $5 million annually for their sponsorship. StubHub retains all of the revenue from the resale of Redskins tickets. A $5 million sponsorship fee is very important to the Redskins, but given the Patriots lawsuit against StubHub is a real potential problem.

For whatever reason sports leagues and teams seem to believe there are no rules when it relates to dealing with the secondary ticket marketplace, and at the end of the day the National Football League continues to risk their sterling reputation.

Would the National Football League ever seriously consider a league wide sponsorship with a secondary ticket operator? Never, it wouldn’t make sense to potentially taint the NFL’s brand with the perception of being directly linked to anyone selling NFL tickets for more than face value. Leave that to other sports leagues; leave that to those ‘desperate’ enough to accept money from anyone.

But in ignoring the various local and/or team operated secondary ticketing agreements; the NFL may indeed be making a big mistake. For a business so focused on delivering a unified message on everything, the NFL is setting itself up for embarrassment when it comes to the optics of how their member’s teams are dealing with the secondary ticket marketplace.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: Associated Press and the Los Angeles Times

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